Key Concepts
- Backwardation: A market condition where future prices are lower than spot prices, indicating strong immediate demand and potential supply shortages.
- M2 Money Supply: A measure of the total amount of money in circulation within an economy.
- LBMA (London Bullion Market Association): The primary wholesale market for precious metals, accused of price manipulation.
- VAT (Value Added Tax): A consumption tax added to the price of goods and services.
- Constitutional Silver (Junk Silver): US 90% silver coins (dimes, quarters, half dollars) historically used as currency.
- Price Fixing Scheme: Alleged manipulation of precious metal prices by entities like the LBMA.
- Physical Demand: Actual buying and taking delivery of the metal, as opposed to paper trading.
Precious Metals Market Analysis & Global Economic Outlook – January 19-26, 2026
This discussion between Elijah K. Johnson of Liberty and Finance and mining executive/precious metal analyst David Jensen focuses on the current state of the silver and gold markets, the factors driving price increases, and the potential implications for the global economy. The conversation highlights a significant price divergence between US and Asian markets, particularly in silver, and attributes it to a combination of global currency debasement, strong physical demand, and a failing price fixing system.
1. Silver Price Surge & US-Asia Divergence
The primary topic is the dramatic rise in silver prices, reaching $95/ounce in the US and exceeding $100/ounce in some Asian markets. Jensen identifies a historic price divergence, currently exceeding $10, between the Shanghai benchmark price and the US Globex market price. This difference is further amplified by a 13% VAT applied to silver withdrawn from Shanghai vaults, resulting in a 21% spread over US cash prices.
This divergence is attributed to strong demand in China and India, driven by similar currency debasement issues as the US. China’s M2 money supply is approximately $48 trillion, compared to the US’s $22 trillion, despite China’s economy being only 75-80% the size of the US economy. This excess liquidity fuels demand for physical silver as a hedge against currency devaluation.
2. The Breakdown of the London Price Fixing Scheme
Jensen argues that the current market conditions signal the collapse of the London Bullion Market Association (LBMA)’s price fixing scheme, established in 1987. He points to an incident in October where liquidity in the London silver market briefly disappeared, indicating a critical shortage of available silver outside of Exchange Traded Funds (ETFs). While London has added 55 million ounces in the last two months, Jensen believes this supply would be quickly absorbed by current demand.
He estimates there are approximately 2 billion ounces of cash claims in London, against a forecast of a 300 million ounce silver deficit this year (UBS estimate). This deficit could rapidly increase to 600-900 million or even 1 billion ounces as paper contract holders seek physical delivery. The backwardation in the silver market is presented as definitive proof that physical metal is king.
3. Backwardation as a Supply Indicator
Backwardation, where future prices are lower than spot prices, is identified as a key indicator of supply shortages. Jensen cites a tracker monitoring silver availability at Costco warehouses, which showed a surge to 630 stores with silver last week, dropping to only 7 stores today following the release of 2026 Silver Eagles. This illustrates the rapid depletion of available supply.
4. Retail Market Dynamics & Selling Pressure
Miles Franklin, the sponsor of the discussion, is experiencing increased sales activity. Interestingly, they are seeing a higher percentage of customers selling silver than ever before, potentially around 30-50% of orders. Jensen suggests this may be a strategic move by individuals to take profits and redeploy capital, but he doesn’t see compelling alternative investment opportunities currently.
5. Constitutional Silver & Refinery Constraints
The discussion touches on “constitutional silver” (90% silver US coins) and 80% Canadian silver, noting that these are currently available at significant discounts due to refinery constraints. Refineries prioritize processing higher purity silver (98-99%) to maximize throughput, limiting their capacity to handle lower purity coins. Jensen emphasizes the utility of these smaller denomination coins as a potential medium of exchange in a crisis.
6. Geopolitical Considerations & Future Outlook
Jensen believes geopolitical tensions are often used as a distraction from underlying economic problems. He suggests that the collapse of the price fixing scheme will lead to significant interest rate fluctuations and economic pain. He anticipates a readjustment in the global economy and encourages viewers to secure physical gold and silver, prepare for potential disruptions, and build strong community ties. He believes the current situation represents a resolution to a 40-year imbalance caused by a flawed pricing system.
7. Miles Franklin Weekly Specials (January 19-26, 2026)
- 1oz Gold Maple Leafs: $65 over melt per coin
- 1oz Silver Maple Leafs (2026): $7.99 over spot per ounce
- 90% US Half Dollars: $0.99 over spot per ounce
- Contact: 1-888-881-Liberty (1-888-154-237)
Notable Quotes:
- David Jensen: “This is not a paper dollar, paper uh uh trading profit uh uh process. This is just secure the metal and get it in house um as best you can.”
- David Jensen: “I just don’t see any reason to look to the redeploy capital [from precious metals]. So, that’s my personal view.”
- David Jensen: “Throughout history the fiat currencies um have have always uh failed.”
This analysis highlights a potentially significant shift in the precious metals market, driven by fundamental supply and demand imbalances and a growing distrust in fiat currencies and centralized financial systems. The conversation emphasizes the importance of securing physical metal as a hedge against economic uncertainty and potential systemic collapse.
AI summaries can miss context or contain errors. Check important details against the original video.
